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Ramonas v. Kerelis

NOVEMBER 18, 1968.




Appeal from the Circuit Court of Cook County; the Hon. CHARLES S. DOUGHERTY, Judge, presiding. Judgment affirmed.


This is an action concerning an arbitration award rendered in favor of the plaintiffs. The controversy arbitrated arose out of a contract which contained a clause providing that any disagreement between the parties should be submitted to arbitration under the rules of the American Arbitration Association, or the American Institute of Architects. Defendants appeal from the judgments entered in the Circuit Court of Cook County on September 27, 1966, and on December 21, 1966, confirming an arbitration award in favor of plaintiffs.

On March 14, 1962, Kerelis Bros. Construction Co., as contractor, and Dr. & Mrs. Julius A. Ramonas, as owners, entered into an agreement for remodeling work on plaintiffs' property. The agreement was signed solely by Alfonsas Kerelis as contractor, and by the aforementioned owners. Article 9 of the contract provided:


"The Contractor shall re-execute any work that fails to conform to the requirements of the contract and that appears during the progress of the work, and shall remedy any defects due to faulty materials or workmanship which appear within a period of one year from the date of completion of the contract. The provisions of this article apply to work done by subcontractors as well as to work done by direct employees of the Contractor."

Article 19 of the contract provided:


"Any disagreement arising out of this contract or from the breach thereof shall be submitted to arbitration, and judgment upon the award rendered may be entered in the court of the forum, state or federal, having jurisdiction. It is mutually agreed that the decision of the arbitrators shall be a condition precedent to any right of legal action that either party may have against the other. The arbitration shall be held under the Standard Form of Arbitration Procedure of The American Institute of Architects or under the Rules of the American Arbitration Association."

On March 3, 1966, the plaintiffs instituted arbitration proceedings in accordance with the rules of the American Arbitration Association by serving a demand for arbitration upon the defendants and filing copies thereof with the Association. In the demand for arbitration, the plaintiffs contended that the addition to their property was carelessly and negligently constructed by defendants and in a poor unworkmanlike manner, and was not in accordance with the plans or in compliance with the Building Code. The defendants, after receiving notice of the commencement of arbitration proceedings, informed the Association in writing that they would not participate in the proceedings.

A hearing was scheduled by the appointed arbitrator for April 27, 1966, and notices were sent to the parties. The defendants did not appear. At the hearing plaintiffs presented witnesses and evidence to substantiate their claim and damages. Shortly after the hearing, the defendants were advised by the Association that the arbitrator would afford them an additional opportunity to submit any evidence to him for his consideration, and that he would also be willing to arrange for another oral hearing if the defendants so desired. The defendants did not respond. On June 20, 1966, the arbitrator rendered an award in favor of the plaintiffs and against the defendants in the amount of $6,895 and $225 costs. A copy of the award and the arbitrator's opinion was forwarded to the defendants on the same day. The arbitration award was not paid, and plaintiffs instituted proceedings in the Circuit Court on July 20, 1966, to have the award confirmed and judgment entered thereon. Defendants were served on August 2, 1966, and on August 31, 1966, they filed their motion to dismiss the plaintiffs' application for confirmation of the arbitration award. The defendants' motion was predicated upon the proposition that the arbitration proceedings were null and void under Illinois law because it constituted an attempt to oust the jurisdiction of the courts over disputes which were not in existence at the time the contract was entered into and was therefore against the public policy of this State.

On September 27, 1966, the trial court held a full hearing on the matter. The court, in denying defendants' motion, stated that the Uniform Arbitration Act, Ill Rev Stats 1965, c 10, §§ 101-123, passed on August 24, 1961, changed the public policy and law of our State, so that a provision in a written contract after that date to submit future controversies to arbitration is valid and enforceable and not against the public policy of our State. The court then confirmed the arbitration award and entered judgment in favor of the plaintiffs and against the defendants, Albert Kerelis and Alfonsas Kerelis, individually and doing business as Kerelis Construction Company, in the sum of $7,120 and costs of suit.

Thereafter, on October 20, 1966, the defendants filed a petition to vacate the judgment. In their petition, the defendants alleged for the first time that one of the defendants, Albert Kerelis, was not a party to the contract, had never signed the contract, and that the award should not have been made against him. Defendants also alleged that on July 28, 1962, the contractor (Alfonsas Kerelis) completed all work on the premises, and on that date the plaintiffs paid the balance due and accepted all work done, that more than one year had elapsed from the date of the completion of the work, and that by the terms of the contract, specifically Article 9 and Article 12, the contract became inoperative after July 28, 1963, this being one year after the work was completed. Article 12 of the contract provided, among other things:


". . . The making and acceptance of the final payment shall constitute a waiver of all claims by the Owner, other than those arising from unsettled liens or from faulty work appearing thereafter, as provided for in Article 9, and of all claims by the ...

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